9 Common Lies and Misconceptions About Trading
April 4, 2020
Regardless if you are new to trading or a seasoned trader, the misconceptions are always surrounding you. By knowing these lies and myths traders can avoid unnecessary frustrations.
This is a list of the most common myths and misconceptions:
You’re a trader, meaning you’re excellent in mathematics.
When I talked about being a trader people concluded that I have advanced skills in mathematics.
This does not reflect reality.
This misconception comes from the fact to work in most trading rooms it was essential to have an engineering degree or a master’s degree from a top-notch university.
However, trading does not require any math skills.
The only calculations needed are how much a losing trade can cost and how much you can earn from a winning trade.
Trading is too complicated and too hard.
This is the oldest excuse in the world for those who simply do not want to say that they are not interested in trading.
Trading is not complicated. Technical analysis is fairly simple to understand.
However, to become a successful trader it does take a long time. It’s not learning all the technical patterns that take the time it is learning to manage your emotions, manage your risk and accept losses when they happen.
To learn trading is to conquer your own psychology which is a challenge for most people.
The trader’s worst enemy is himself, not the market.
Trading is too risky.
The moment I tell people that I am a forex trader the first thought that comes to their mind is that I’m gambling my money away.
The truth is that trading involves risks and can lead to the loss of all of your capital. However, that risk is manageable.
Those who tell you that trading is too risky and they have lost everything because of it, are simply people who failed to manage their risk.
With good risk management, it is impossible to blow your account.
According to studies done by large brokers 1 trade out of 2 is a winner yet 90% of traders end up losing money. Therefore, we can conclude that people lose money in trading due to poor risk management as the main reason.
It takes a lot of money to start trading.
You all heard the expression “you need money to make money” right?
Well in most cases it’s true but when it comes to trading you can start trading with an account as low as 500$.
Therefore, trading is not only for the rich!
On the other hand, do not expect to become rich through trading. Don’t get wrong, you can reach a point where your income is high from trading but this will take some time to reach.
To reach that level you need to stay consistent in your trading.
In my experience what made the difference for me is having a set of rules to follow consistently and using risk that I am comfortable with.
The most successful traders are the ones who started small and were able to grow their accounts in a sustainable way.
The trading world is full of scammers.
The trading world has many scammers. They could be selling indicators that are junk or selling you signals with the promise of never-ending profits.
However, not all traders are crooks. I have been inspired by many teachers online that helped shape the trader I am today.
And for those of you who are not able to distinguish a scammer from a non-scammer, feel free to check our previous article on how to identify scammers in the trading world.
Trading takes all day, you won’t have a life.
People often associate the job of a trader with someone who is always stuck to his screens and someone who only lives to trade. A well know quote about this: “no life, no wife just trading”.
What takes time in trading is learning how to trade.
On the other hand, once you have found your trading system and written your trading plan, trading would take as much as a couple of hours a day.
The longer the timeframe used the less time you need to spend in front of your pc. Therefore, it is quite possible to combine a fulltime job with trading.
The problem lies in the fact that people think the more time you spend in front of your screens the more money you can earn.
Which is completely wrong. The key here is to identify what type of trader fits your personality and adjust your trading style to that. All you have to do is find the most appropriate strategy that fits your character.
Trading is done without STOPLOSS.
That is the most dangerous of all the misconceptions.
We have all experienced the pain of a stop loss being triggered and then racing moments later to our target.
However, People who trade without a stop loss are exposed. Furthermore, they could lose their account on one single trade as the risks are boundless.
However, when you predefine your stop loss, your emotions are at bay so please do not forget to define you stop loss before entering any trades.
Trading is a Get-Rich-Quick Scheme!
Skilled traders do make money trading. However, like any other profession, success was not made overnight. If trading the markets was so easy you would think that all of us are billionaires right now.
Let this be clear to you once and for all, there are no shortcuts to be successful in trading. It requires a lot of practice and experience to master. There are no substitutes for hard work nor will there ever be. Having a strong will to succeed is essential in any profession or anything in life.
You need 8 to 10 monitors and a high-end computer to trade the forex market.
This is another lie an inexperienced person would tell you. He can easily mislead you and make you waste a lot of money on a setup that you don’t actually need.
The first thing people do when deciding to be traders they buy several monitors, the best graphic card, so they can trade professionally.
It doesn’t matter which market you trade all you would need is a 17” laptop. I personally have a laptop that I take everywhere and check my charts without any problems. Keep the work simple and you will get better results.
The forex market is full of myths that can harm a trader’s chances at success or can lead them astray.
So it is important for a trader to do their research and understand what currency trading actually involves; some of this will come from experience, and some of it will come from educating one’s self.